Daily Market Review
13th September 2013
Fundamental News
Today’s highlights:
· PPI (MoM) (CH; 08:15 GMT)
· Retail Sales (MoM) + PPI (MoM) (U.S; 13:30 GMT)
· Michigan Consumer Sentiment (U.S; 14:55 GMT)
Jobless claims in the U.S. declined last week to the lowest level since April 2006 as work on computer systems in two states caused those employment agencies to report fewer applications. First-time claims for unemployment insurance fell by 31,000 to 292,000 in the week ended Sept. 7, which also included the Labor Day holiday, a Labor Department report showed yesterday in Washington. On the other hand, the U.S. budget deficit narrowed in August from a year earlier as a stronger job market boosted revenue, propelling the world’s largest economy toward its smallest annual shortfall since 2008. Outlays exceeded receipts by $147.9 billion last month, compared with a $190.5 billion gap in August 2012, the Treasury Department said yesterday in Washington. In the 11 months through the fiscal year that ends Sept. 30, the deficit was $755.3 billion, the narrowest for that period in five years. In addition, Confidence among American consumers stabilized last week after four straight declines even as their views of the economy deteriorated. The Bloomberg Consumer Comfort Index rose to minus 32.1 in the week ended Sept. 8 from minus 32.3. The drop was within the survey’s margin of error of 3 percentage points. A measure of households’ assessment of the economy fell to the lowest level since mid-May.
According to an article published by Bloomberg News, Mario Draghi’s forward guidance on European Central Bank interest rates has split economists down the middle. Of 31 economists in a Bloomberg monthly survey, 16 said the ECB president’s commitment that official rates would remain at “present or lower levels for an extended period of time” hasn’t been effective. The remainder said it has. Draghi made the unprecedented vow in July, after the Federal Reserve’s signal that it may start withdrawing U.S. stimulus pushed market rates higher globally. While European borrowing costs initially fell, they have since returned to levels the ECB head called “unwarranted.” That supports the view of some economists that the Frankfurt-based central bank can’t stop rates rising as the 17-nation currency bloc rebounds from its longest-ever recession.
Bank of England Governor Mark Carney said his flagship communications policy is supporting the U.K. economic recovery, as he answered lawmakers who suggested that it may be confusing the public and doubted by investors. Less than two months since Carney and colleagues signaled that they don’t intend to raise their key interest rate from 0.5 percent before late-2016, financial markets are betting they’ll have to move sooner as the economy shows signs of strengthening.
EUR/USD: The EUR/USD was trading lower at 1.32682 at the time of writing before a government report forecast to show U.S. retail sales accelerated. Consumer purchases in the U.S. climbed 0.5 percent in August after a 0.2 percent increase in July, according to the median forecast of economists surveyed by Bloomberg News. Moreover, the U.S will also release the PPI (MoM), which will probably show an improvement to 0.2% from a previous reading of 0.0%. The country will also release the Michigan Consumer Sentiment (Forecast: 82.0 – Previous: 82.1) today. The ongoing Syrian tensions also supported the USD. Investors should wait for the key data to come on market to get visibility on the direction of the pair. On the European trading session no major economic data is expected. The soft data likely to bring mild fluctuations are the Employment Change (QoQ) (Forecast: -0.2% – Previous: -0.5%) and the Trade Balance (Forecast: 15.3B – Previous: 14.9B). Market participant should also monitor the latest developments in the Syria for additional visibility. The resistance level is at 1.33233 and the support level is at 1.32272.
USD/CHF: The USD/CHF was trading higher at 0.93367 at the time of writing before a report forecast to show that Consumer purchases in the U.S. climbed 0.5 percent in August after a 0.2 percent increase in July, according to the median forecast of economists surveyed by Bloomberg News. Meanwhile, another report in the U.S is expected to show that the PPI (MoM) improved to 0.2% from a previous reading of 0.0%. The country will also release the Michigan Consumer Sentiment (Forecast: 82.0 – Previous: 82.1) today.
However, investors should stay cautious as Switzerland will release the PPI (MoM)(Forecast: 0.2% – Previous: 0.0%). If better than expected data is released, it would be bullish for the CHF and would bring some market corrections intra trade. Investors should adopted a wait and see strategy on the pair. Market participants should also focus on developments on the Syrian front for additional visibility. The resistance level is at 0.93698 and the support level is at 0.92717.
WTI (Oil): Oil was trading lower at 108.385 at the time of writing as talks between the U.S. and Russia regarding the situation in Syria advanced. However, investors should stay cautious on the commodity as sentiments remain fragile on the market. The events likely to affect the trend of the commodity are the U.S. retail sales, which is climbed 0.5 percent in August after a 0.2 percent increase in July, according to the median forecast of economists surveyed by Bloomberg News. Moreover, the U.S will also release the PPI (MoM) and the Michigan Consumer Sentiment. If better than expected data are released today, it will indicate that the U.S economy is improving and will demand more oil to sustain the progress. Investors should also keep an eye on the latest developments in the Middle East to get better indication on the trend of the commodity. The resistance level is at 110.069 and the support level is at 106.437
Good Luck in trading…
